IGI Logo

Gold

Gold prices experienced a modest decline of -0.13%, settling at 62443, as the market grapples with the stability of the U.S. labor market. The U.S. Labor Department reported a marginal decrease of 9,000 in weekly jobless claims to 218,000, indicating a relatively unchanged labor market. Continuing jobless claims also declined to 1.871 million, down by 23,000 from the previous week's revised level. Despite stronger-than-expected economic data, Richmond Federal Reserve Bank President Thomas Barkin highlighted challenges in accurately adjusting for seasonal variations around the new year. Barkin emphasized the Fed's patience in interpreting inflation data before considering any adjustments to the benchmark policy rate. U.S. central bankers are cautious about cutting interest rates until they have more confidence that inflation is on track to reach the 2% target. The outflows from gold ETFs in North America continued in the first month of 2024, mirroring the trend seen in 2023, with European funds experiencing significant losses, while Asia witnessed another monthly inflow. From a technical standpoint, the market is undergoing long liquidation, with a -2.49% drop in open interest, settling at 13955. Gold is currently finding support at 62235, and a breach below this level could lead to a test of 62020. On the upside, resistance is anticipated at 62610, with a move above potentially pushing prices to test 62770. The combination of economic data, global ETF flows, and technical signals underscores the complex factors influencing gold prices, requiring a nuanced approach for market participants.
Trading Ideas:
* Gold trading range for the day is 62020-62770.
* Gold dropped as U.S. labor market remains relatively unchanged from last week.
* Fed's Barkin says he's cautious about accuracy of recent economic data
* U.S. central bankers want to hold off on cutting interest rates until they have more confidence that inflation is headed down to 2%

Silver
Silver prices recorded a gain of 0.75%, settling at 70837, driven by short-covering amid uncertainty regarding the Federal Reserve's stance on interest rate cuts. The lack of a concrete timeline for rate adjustments in recent Fed speeches has created an air of uncertainty. Richmond Federal Reserve Bank President Thomas Barkin emphasized the need for sustained good inflation data before considering rate cuts, highlighting the central bank's cautious approach. Lower Initial Jobless Claims for the week ending February 2 contributed to a US Dollar recovery. The Department of Labor reported a figure of 218K, below expectations of 220K. However, the overall economic calendar in the United States has little to offer this week. Geopolitical tensions escalated as Israel's Prime Minister Benjamin Netanyahu rejected a ceasefire proposal, expressing a downbeat market sentiment. Additionally, China, the second-largest global economy, reported a sharper-than-expected 0.8% year-on-year decline in its consumer price index for January, marking the fourth consecutive month of contraction and the most significant since 2009. Technically, the silver market witnessed short-covering, with a -6.78% drop in open interest to settle at 30408. Despite a price increase of 526 rupees, Silver found support at 70160, and a breach below could lead to a test of 69490 levels. Resistance is likely at 71220, and a move above may push prices to test 71610. Traders are closely monitoring the Fed's signals, economic indicators, and geopolitical developments influencing silver's price dynamics.
Trading Ideas:
* Silver trading range for the day is 69490-71610.
* Silver gains on short covering amid uncertainty over timing of Fed interest rate cuts.
* Fed Collins sees rate cuts later this year only if price pressures remain consistent with forecasts.
* Fed policymakers are considering rate cuts at this stage as “premature.”

Crude Oil
Crude oil prices surged by 2.87%, settling at 6307, driven by renewed tensions in the Middle East, intensifying concerns about supply disruptions. Israeli Prime Minister Benjamin Netanyahu's rejection of a ceasefire offer from Hamas, coupled with the possibility of further U.S. military actions against Iranian forces, heightened geopolitical risks. On the demand side, official data revealed a substantial 3.15 million barrels decrease in U.S. gasoline inventories, surpassing the forecast of 140,000 barrels. However, U.S. crude stockpiles increased by 5.5 million barrels, exceeding market expectations for a 1.895-million-barrel build. The U.S. Energy Information Administration (EIA) projected a rise in crude oil production to 13.21 million barrels per day in 2024, indicating a 120,000 bpd reduction from earlier expectations. Cold weather-related shut-ins in key oil-producing states, such as North Dakota, contributed to a dip in U.S. crude oil production to 12.6 million bpd in January. Technically, the market witnessed short covering, with a -2.13% drop in open interest, settling at 10106. Crude oil is currently finding support at 6174, and a breach below could test 6040 levels. Resistance is anticipated at 6380, and a move above might lead to prices testing 6452. The combination of geopolitical tensions, demand-supply dynamics, and production forecasts underscores the complexity of factors influencing crude oil prices.
Trading Ideas:
* Crudeoil trading range for the day is 6040-6452.
* Crude oil gains due to renewed tensions in the Middle East and concerns about supply.
* Israeli Prime Minister Benjamin Netanyahu rejects a ceasefire offer from Hamas.
* US gasoline inventories decrease by 3.15 million barrels, exceeding expectations.

Natural Gas
Natural gas experienced a decline of -2.6%, settling at 161.2, attributed to the increase in output and a reduction in gas flow to liquefied natural gas (LNG) export plants. Traders noted rising production as gas wells resumed operations after freezing during extreme cold in mid-January. However, LNG feedgas remained low, primarily due to an ongoing unit outage at Freeport LNG's export plant in Texas. The U.S. Energy Information Administration (EIA) projected record-high natural gas production and demand in 2024. Dry gas production is anticipated to reach 104.37 billion cubic feet per day (bcfd) in 2024 and 106.46 bcfd in 2025, up from the record of 103.75 bcfd in 2023. Domestic gas consumption is projected to rise from 88.96 bcfd in 2023 to 90.64 bcfd in 2024 before easing to 89.55 bcfd in 2025. The EIA's LNG export forecasts indicate an upward trend, with average exports expected to reach 12.09 bcfd in 2024 and 14.43 bcfd in 2025, surpassing the record of 11.83 bcfd in 2023. Technically, the natural gas market observed fresh selling, with a 2.39% increase in open interest to settle at 76094. Despite a price decrease of -4.3 rupees, Natural Gas found support at 158.9, with a potential test of 156.6 if breached. Resistance is expected at 165.1, and a move above could lead to testing 169. Traders are closely monitoring production levels, export dynamics, and technical factors influencing the natural gas market amid changing supply and demand dynamics.
Trading Ideas:
* Naturalgas trading range for the day is 156.6-169.
* Natural gas dropped as near-record output and mostly mild weather depress demand.
* Gas wells are returning to service after freezing during extreme cold in mid-January.
* LNG feedgas remains low due to an ongoing unit outage at Freeport LNG's export plant in Texas.


Copper
Copper prices experienced a decline of -0.7%, settling at 706.25, influenced by a strong dollar and cautious industrial sentiment in China, the world's leading consumer of the metal. The greenback strengthened on the back of robust labor data in the U.S. and hawkish comments from Fed Chair Powell, impacting the purchasing power of key importers and increasing benchmark borrowing costs crucial to industrial activities. China's industrial sector faced headwinds as official manufacturing PMI data indicated a fourth consecutive contraction in January. The Yangshan copper premium saw a persistent decline as Chinese factories held off on copper purchases, contributing to a significant increase in inventories in major Chinese warehouses, which rose over 120% year-to-date to nearly 70,000 tonnes. Contrary to official data, the Caixin China General Manufacturing PMI unexpectedly stood at 50.8 in January, maintaining growth for the third consecutive month. However, this contradicted official figures that signaled prolonged weakness ahead of the Lunar New Year celebration. The International Copper Study Group (ICSG) reported that preliminary data released in January suggested a 1% increase in world copper mine production over the first 11 months of 2023. Technically, the market witnessed fresh selling, with a notable 11.02% gain in open interest, settling at 6419. Copper is currently finding support at 702.2, and a breach below may lead to a test of 698.2. On the upside, resistance is anticipated at 711.9, with a move above potentially pushing prices to test 717.6.
Trading Ideas:
* Copper trading range for the day is 698.2-717.6.
* Copper dropped due to strength in the dollar and pessimistic industrial sentiment in China.
* Yangshan copper premium declined as factories refrained from purchasing the metal
* Strong labor data in the US and hawkish remarks from Fed Powell lifted the dollar.

Zinc
Zinc faced a significant decline of -2.51%, settling at 209.85, as concerns over an economic and demand slowdown in China, the top consumer, weighed on the market ahead of an extended public holiday. The delay in production at Russia's Ozernoye mine, the country's largest zinc mine, until at least the third quarter of 2024 and the full ramp-up postponed to 2025, further dampened sentiment. The mine has encountered challenges from Western sanctions and a plant fire in November, disrupting its original production timeline. The suspension of Nyrstar's Budel smelting operations in the Netherlands due to high energy costs added to the pressure. Despite these supply disruptions, sustained zinc price rallies remain unlikely until demand sees a significant uptick and market focus shifts from projected surpluses of the metal, commonly used for steel galvanization. Technically, the market witnessed fresh selling, with a 7.53% increase in open interest, settling at 4996. Zinc is currently finding support at 207.2, and a breach below may test 204.5. On the upside, resistance is anticipated at 214.7, with a move above potentially pushing prices to test 219.5. The lack of concern about zinc supplies is evident in the discount for cash over the three-month zinc contracts on the LME, emphasizing the prevailing market sentiment. Surpluses in zinc deliveries to LME-registered warehouses, which have increased nearly 200% since November, further contribute to the subdued outlook for zinc prices. Traders are closely monitoring global economic trends, demand dynamics, and geopolitical factors impacting the zinc market.
Trading Ideas:
* Zinc trading range for the day is 204.5-219.5.
* Zinc dropped as an economic and demand slowdown in China pressured prices.
* Chinese manufacturing PMI data showed a fourth consecutive contraction in the sector, hampering the prices.
* Caixin China General Manufacturing PMI unexpectedly showed growth in factory activity for the third straight month.

Aluminium
Aluminium prices inched up by 0.1%, settling at 200.9, as traders navigated a market characterized by a lack of significant catalysts and subdued trading activity ahead of a prolonged public holiday in China, a major consumer of the metal. The cautious sentiment in the market was accentuated by the China Nonferrous Metals Industry Association's report, revealing a 30% decline in aluminium product exports from China to the European Union covered by the bloc's Carbon Border Adjustment Mechanism (CBAM) in 2023. The EU's implementation of the CBAM in October aims to prevent environmentally damaging foreign products from undermining its green transition. China's official PMI data indicated a contraction in factory activity for the fourth consecutive month, while the Caixin China General Manufacturing PMI unexpectedly stood at 50.8 in January 2024, beating market forecasts. The conflicting data suggests a nuanced economic landscape in China, particularly ahead of the Lunar New Year celebration. Meanwhile, primary metal imports surged to 1.54 million metric tons from 668,000 tons in 2022, falling just short of the record tally in 2021. Japan, on the other hand, experienced a 26% decline in primary aluminium imports to 1.03 million metric tons in 2023 due to sluggish demand in the construction and manufacturing sectors. Technically, the aluminium market observed short-covering, marked by a -3.59% drop in open interest to settle at 3516. With a modest price increase of 0.2 rupees, Aluminium found support at 199.8, potentially testing 198.5 if breached. Resistance is expected at 202.4, and a move above could lead to testing 203.7.
Trading Ideas:
* Aluminium trading range for the day is 198.5-203.7.
* Aluminium settled flat as traders gauged the lack of fresh market-moving catalysts
* China's export of aluminium covered by EU carbon tax down 30% in 2023
* Japan's imports of primary aluminium fell 26% to 1.03 million metric tons in 2023

Cottoncandy
Cottoncandy demonstrated strength, settling up by 1.32% at 58320, driven by robust demand as indicated by the USDA's weekly sales report. Net sales for 2023/2024 surged by 69% from the previous week, totaling 349,400 running bales and surpassing the four-week average by 37%. The strong demand, particularly from China and Vietnam, contributed to exports reaching another marketing-year peak at 396,700 bales. The USDA's WASDE report for January projected a global production increase of 260,000 bales compared to December, with larger crops expected from China and Argentina. The Cotton Association of India (CAI) maintained its estimate for domestic consumption at 311 lakh bales for the 2023-24 season, while pressing estimates were held steady at 294.10 lakh bales. The CAI's observations are based on inputs from cotton-growing state associations and trade sources. Despite reports of pink bollworm infestation in cotton crops, there has been a notable decline, reducing from 30.62% during 2017-18 to 10.80% in 2022-23. This positive trend in infestation is noteworthy for the cotton industry. Brazilian cotton shipments in November reached 253.71 thousand tons, marking a 12% increase from October 2023 but a 5.5% decrease compared to November 2022. In the Rajkot spot market, a major trading hub, prices ended at 26801.4 Rupees, gaining 0.11%. Technically, Cottoncandy is under fresh buying, with a 7.74% increase in open interest to settle at 376. Prices rose by 760 rupees, finding support at 57900, and a breach below could test 57470. Resistance is expected at 58580, with a move above potentially leading to testing 58830.
Trading Ideas:
* Cottoncandy trading range for the day is 57470-58830.
* Cotton gains after USDA weekly sales report a 69% increase in exports from previous week
* Global production increase of 260,000 bales compared to December - USDA
* CAI estimates domestic consumption for the 2023-24 season to remain flat at 311 lakh bales.
* In Rajkot, a major spot market, the price ended at 26801.4 Rupees gained by 0.11 percent.

Turmeric
Turmeric prices saw a decline of -1.96%, settling at 15330, driven by profit booking after earlier gains supported by reduced supplies in the spot market. The delayed harvesting of the new crop and tighter ending stocks are expected to maintain positive market sentiments in the near term. While export demand is anticipated to increase with upcoming festivals, the upside is limited as buying activities have slowed in anticipation of stock releases ahead of the new crop. Pressure on turmeric prices is also attributed to improved crop conditions due to favorable weather. Concerns among Maharashtra farmers over the location of PM Modi's Turmeric Board in Telangana add to the uncertainties in the market. Expectations of a 20–25% decline in turmeric seeding this year in key regions like Maharashtra, Tamil Nadu, Andhra Pradesh, and Telangana contribute to the cautious sentiment. Turmeric exports during Apr-Nov 2023 dropped by 1.07%, totaling 110,745.38 tonnes, compared to the same period in 2022. In November 2023, turmeric exports fell by 30.78% compared to November 2022. In the major spot market of Nizamabad, the price dropped by -0.45% to end at 13879.7 Rupees. Technically, the market is undergoing long liquidation, with a -0.37% drop in open interest to settle at 13445. Turmeric is currently finding support at 15136, and a breach below could test 14940. On the upside, resistance is anticipated at 15604, with a move above potentially pushing prices to test 15876. The market dynamics reflect a delicate balance between supply factors, export-import trends, and domestic agricultural conditions, influencing turmeric prices.
Trading Ideas:
* Turmeric trading range for the day is 14940-15876.
* Turmeric dropped on profit booking after prices gained supported by reduced supplies.
* Delayed harvesting of new crop and tighter ending stocks is likely to keep market sentiments up
* Export has been slow down in recent months and expected to increase in wake of series of festivals ahead.
* In Nizamabad, a major spot market, the price ended at 13879.7 Rupees dropped by -0.45 percent.

Jeera
Jeera experienced a decline of -1.47%, settling at 27165, driven by higher production expectations in key cultivating states like Gujarat and Rajasthan. The current rabi season witnessed a four-year high in jeera acreage, with farmers expanding cultivation due to record prices in the previous marketing season, showcasing a strong correlation between market prices and acreage. In Gujarat, jeera cultivation reached 5.60 lakh hectares, a remarkable 160% increase from the previous year's 2.75 lakh hectares, surpassing the normal acreage of 3.5 lakh hectares. Rajasthan saw a 25% surge in jeera cultivation, reaching 6.90 lakh hectares compared to 5.50 lakh hectares in the previous year. Global demand for Indian jeera faced challenges as buyers preferred alternative sources like Syria and Turkey due to higher prices in India. Export figures showed a decline of 33.10% during Apr-Nov 2023, totaling 84,467.16 tonnes compared to 1,26,252.59 tonnes in the same period in 2022. However, November 2023 exports rose by 30.04% compared to October 2023. In the Unjha spot market, the price ended at 32470.1 Rupees, declining by -0.7%. Technically, Jeera is under long liquidation, with a -100% drop in open interest to settle at 0. Despite a price decline of -405 rupees, Jeera found support at 26820, potentially testing 26460 if breached. Resistance is expected at 27620, and a move above could lead to testing 28060. Traders are closely monitoring production trends, global demand dynamics, and technical factors influencing Jeera prices in the current market conditions.
Trading Ideas:
* Jeera trading range for the day is 26460-28060.
* Jeera prices dropped due to higher production prospects
* In Gujarat, Cumin sowing witnessed very strong growth by nearly 103% with 530,030.00 hectares against sown area of 2022
* Stockists are showing interest in buying on recent downfall in prices triggering short covering.
* In Unjha, a major spot market, the price ended at 32470.1 Rupees dropped by -0.7 percent.

Views express by all participants are for information & academic purpose only. Kindly read disclaimer before referring below views. Click Here For Disclaimer